Question

Now suppose Congress passes a tax cut that increases the income of San Diego residents.

If gyros are a normal good, this will cause the demand for gyros to_____ (increase or decrease) and why

Answer 1

A tax cut that increases the income of San Diego residents will increase the demand for gyros if they are a normal good.

Step-by-step explanation:

If gyros are a normal good, a tax cut that increases the income of San Diego residents will increase the demand for gyros. A normal good is a product whose demand rises when income rises. When residents have more income due to the tax cut, they are likely to spend more on gyros, resulting in an increase in demand.